Sony still losing on every PlayStation 3 it sells

[MrPopo]

that would be $504,000,000.00 lost. ok so lets just say all the systems cost $300.00 that would be around $8,400,000,000.00 subtract the $504,000,000.00 that leaves them with $7,896,000,000.00 i dont see the loss there?? am i confused???

Let me try and ease up the confusion here. Saying that Sony loses $18 on every console sold means that if they are selling the units to retailers for $200/each then Sony had to pay $218 to manufacture the unit. To state the problem in another way, this would be equivalent to you buying PS3's from the store at $300 a piece and selling them to your friends at $282. You're losing $18 per unit.

iSuppli’s early analysis showed that Sony loses $306.85 per 20GB hard-drive equipped PS3 sold" who would pay $306.00 for a 20 gb hard drive???

You misinterpreted the statement. At launch time the 20 GB PS3 sold at $400 (if I remember correctly) but it cost them ~$700 to manufacture.

iSuppli states the PS3 now costs $448.73 to build while selling for $399 and the PS3 will probably reach the break-even point in 2009." it's almost a $50.00 loss on every unit please lets be realistic these "guesstimations" are way off.

I'd suspect that while the estimates on manufacturing cost might be a bit high it is a known fact in this industry that most consoles sell at a loss initially and eventually break even or are sold for more than the manufacturing cost.

the fact of the matter is if your dept. doesnt profit you shut it down period!

Ah hah, I see your confusion here. How many PS3's do you think Sony wants to sell you? Exactly one. The benefit behind getting a PS3 into your house is you now will spend money on PS3 software, where Sony can make a lot of money from the developers due to the licensing costs. If each PS3 game gives Sony $10 profit (totally pulling numbers out of my ass) then if I can get someone to buy 20 PS3 games that's $200 profit from the game sales. If I sell my PS3 console at a loss of $50 that means for that customer I've made a net of $150. So the overall Playstation department is profitable even though one portion of it loses money. This is standard business practice. You have to invest money in order to make a total profit across the board.

[the7k]

It's no different from certain companies that sell printers for pennies, then charge out the ass for ink. You know where their money is coming from, and it's not from selling the printers.

[Niode]

Yes, this way of conducting business is called the razor blade model. They sell you a fancy razor made out of titanium that vibrates and dispenses moisturising balm then they sell you the overpriced specific razor cartridges for that specific model that cost them next to nothing to make. It's worked for the razor manufacturers for decades and it works for the video games industry. Just about the only company that doesn't do this is Nintendo, they make profit from day one because they choose their tech wisely and never fight for the cutting edge. They find other sectors to dominate in, hence their consistent success throughout the years. Even if you don't think the Gamecube or N64 were massive successes they made money from day one. The Xbox on the other hand cost Microsoft $485million the year before the 360 launch. The following year it cost Microsoft $1.26billion.

[Pulsar_t]

Ken Kutaragi nailed it with the original Playstation but the PS2 and PS3 are so complex and draconian that they prevailed mostly on brand name and hyped multimedia functionality.

I liked Sega's 'clean design' approach with the Dreamcast which Microsoft copied for their first XBox only to screw it up with the 360. I don't think the razor blade model will sound attractive to investors come 8th generation of consoles (if indeed they will still be called that)

[enderfall]

I don't think the razor blade model will sound attractive to investors come 8th generation of consoles (if indeed they will still be called that)

Maybe I'm wrong, but aside from the Wii, isn't that the historical model of the industry?

Which get's me thinking. What if Sony or Microsoft took this appraoch with their next console:

Sell the hardware for a nominal "fee", say $100 at launch, but make it a requirement to also buy $300 worth of software. Would the incredible opportunity to gain a ridiculous amount of market share at a theoretical $100 price point be manageable and offset by increased software sales down the road? Traditionally launches are weak in available software, so something would need to be done in that regard such as delaying the system until at least 2 AAA titles are available. But It's an interesting concept, because as the Wii demonstrates, release the best selling console and software sales will invariably follow, no matter how crappy the games are.

[GSZX1337]

Maybe I'm wrong, but aside from the Wii, isn't that the historical model of the industry?

IIRC, Nintendo has never sold consoles at a loss.

[enderfall]

Maybe I'm wrong, but aside from the Wii, isn't that the historical model of the industry?

IIRC, Nintendo has never sold consoles at a loss.

Have any tangible evidence?

[darthbluntedone]

Is English your first language? None of that post makes any sense. At all.

ok i will post this again since i see mod sucks mod here

it is 100% ok for a mod to insult another member but when that member calls a mod a asshole that post gets deleted

delete this insulting post mr popo ha ha look no punctuation OMG HE IS USING CAPS NOW! look i am sorry but i will not let any one talk to me like that so if you are going to delete my post about niode being a asshole please delete his post it is only fair but being fair is not this site

i am sooo sorry my illuminati master of the highest degree how should i bow down to you oh all mighty and knowledgable one please show me the ways you can proove that sony has lost money on everything it sells and may i learn the true english of the uk which must stand for uttermost knowledgeable.

you know what i really think this place sucks because mods suck off other mods here now fuck off assholes

[lwcook]

Is English your first language? None of that post makes any sense. At all.

ok i will post this again since i see mod sucks mod here

it is 100% ok for a mod to insult another member but when that member calls a mod a asshole that post gets deleted

delete this insulting post mr popo ha ha look no punctuation OMG HE IS USING CAPS NOW! look i am sorry but i will not let any one talk to me like that so if you are going to delete my post about niode being a asshole please delete his post it is only fair but being fair is not this site

i am sooo sorry my illuminati master of the highest degree how should i bow down to you oh all mighty and knowledgable one please show me the ways you can proove that sony has lost money on everything it sells and may i learn the true english of the uk which must stand for uttermost knowledgeable.

you know what i really think this place sucks because mods suck off other mods here now fuck off assholes

[MrPopo]

Maybe I'm wrong, but aside from the Wii, isn't that the historical model of the industry?

IIRC, Nintendo has never sold consoles at a loss.

Have any tangible evidence?

I don't have any numbers to back it up, but I've heard the same thing, for what it's worth.